GST Council Meeting: Relief For Homebuyers as Tax on Real Estate Sector Slashed to 5 Per Cent
The major relief for real estate sector came during the ongoing meeting of the Council.
New Delhi: The GST Council on Sunday approved rationalisation of tax rate on under-construction residential properties to 5 per cent without input tax credit (ITC), from 12 per cent, currently.
The Council also slashed the tax rate on affordable housing segment to 1 per cent. The major relief for real estate sector came during the ongoing meeting of the Council.
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“GST payable for under-construction flat will be now 5%. Affordable housing will have 1% GST rate,” said Finance Minister Arun Jaitley. The revised tax rates will come into effect from April 1.
“We’ve adopted twin definition of affordable housing. One on basis of carpet area and second on cost. In metros, 60 sq m carpet area and Rs 45 lakh cost of apartment to fall in affordable housing. In non metros, it’ll be 90 sq m carpet and Rs 45 lakh cost, it’ll come into effect from Apr 1,” Jaitley added.
With regard to lotteries, the GST Council, however, deferred its decision with Jaitley saying that the Group of Ministers (GoM) will meet again to discuss the proposal.
Earlier on Wednesday, the decision on rationalisation of tax rates on real estate and lottery was deferred as some non-BJP states demanded that a meeting, where members are physically present, be convened for deciding on such crucial issues.
The GST Council meeting had also decided to extend the deadline for filing summary sales return – GSTR-3B – for January by two days till February 22.
In today’s meeting, the Council, headed by Finance Minister Arun Jaitley and comprising state counterparts, took the decision of cutting tax rates on under-construction housing property after considering the reports of a group of ministers (GoM).
The GoM on real estate sector, headed by Gujarat Deputy Chief Minister Nitin Patel, had earlier this month suggested cutting GST on under-construction residential properties to 5 per cent without input tax credit (ITC), from 12 per cent, currently. On affordable housing segment, it suggested that GST be slashed to 3 per cent, from 8 per cent.
At present, GST is levied at 12 per cent with ITC on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.
During the Council meeting on Wednesday, the representative from Bihar suggested that GST on affordable housing segment be brought down to 1 per cent. It also suggested that where 90 per cent area of a property is used for residential purposes and 10 per cent is used for commercial purpose, it should be treated as residential property for GST purposes.
The GoM on lottery, under Maharashtra Finance Minister Sudhir Mungantiwar, favoured a uniform GST rate of either 18 per cent or 28 per cent.
Currently, a state-organised lottery attracts 12 per cent GST while a state-authorised lottery attracts 28 per cent tax.
The GoM favoured hiking GST rate on the state-organised lottery to either 18 per cent or 28 per cent and lowering rate on state-authorised lottery to 18 per cent or retaining it at 28 per cent.